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OECD DEVELOPMENT CENTRE Working Paper No. 270

THE MACRO MANAGEMENT OF COMMODITY BOOMS: AFRICA AND LATIN AMERICA’S RESPONSE TO ASIAN DEMAND by

Rolando Avendaño, Helmut Reisen and Javier Santiso Research area: Financing Development

August 2008


The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

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DEVELOPMENT CENTRE WORKING PAPERS This series of working papers is intended to disseminate the Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language. Comments on this paper would be welcome and should be sent to the OECD Development Centre, 2, rue André Pascal, 75775 PARIS CEDEX 16, France; or to dev.contact@oecd.org. Documents may be downloaded from http://www.oecd.org/dev/wp or obtained via e-mail (dev.contact@oecd.org). THE OPINIONS EXPRESSED AND ARGUMENTS EMPLOYED IN THIS DOCUMENT ARE THE SOLE RESPONSIBILITY OF THE AUTHORS AND DO NOT NECESSARILY REFLECT THOSE OF THE OECD OR OF THE GOVERNMENTS OF ITS MEMBER COUNTRIES

CENTRE DE DÉVELOPPEMENT DOCUMENTS DE TRAVAIL Cette série de documents de travail a pour but de diffuser rapidement auprès des spécialistes dans les domaines concernés les résultats des travaux de recherche du Centre de développement. Ces documents ne sont disponibles que dans leur langue originale, anglais ou français ; un résumé du document est rédigé dans l’autre langue. Tout commentaire relatif à ce document peut être adressé au Centre de développement de l’OCDE, 2, rue André Pascal, 75775 PARIS CEDEX 16, France; ou à dev.contact@oecd.org. Les documents peuvent être téléchargés à partir de: http://www.oecd.org/dev/wp ou obtenus via le mél (dev.contact@oecd.org).

LES IDÉES EXPRIMÉES ET LES ARGUMENTS AVANCÉS DANS CE DOCUMENT SONT CEUX DES AUTEURS ET NE REFLÈTENT PAS NÉCESSAIREMENT CEUX DE L’OCDE OU DES GOUVERNEMENTS DE SES PAYS MEMBRES

Applications for permission to reproduce or translate all or part of this material should be made to: Head of Publications Service, OECD 2, rue André-Pascal, 75775 PARIS CEDEX 16, France

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS ..........................................................................................................................4 PREFACE .......................................................................................................................................................5 RÉSUMÉ ........................................................................................................................................................6 ABSTRACT ....................................................................................................................................................7 I. INTRODUCTION .....................................................................................................................................8 II. IMPACT CHANNELS.............................................................................................................................9 III. THE MACROECONOMIC CHALLENGES OF COMMODITY BOOMS ..........................................12 IV. SOME RECENT POLICY EVIDENCE...............................................................................................17 V. CONCLUDING REMARKS: AN OPPORTUNITY FOR BETTER MANAGEMENT ..................30 REFERENCES .............................................................................................................................................31 OTHER TITLES IN THE SERIES/ AUTRES TITRES DANS LA SÉRIE ..............................................33

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ACKNOWLEDGEMENTS

This paper was presented at the All China Economics International Conference, held in Hong Kong, China on 12-14 December 2007 and at the Paris School of Economics, France. Javier Santiso is Director and Chief Economist of the OECD Development Centre, Helmut Reisen is Head of Research at the OECD Development Centre and Rolando Avendaño is a Research Associate at the OECD Development Centre and PhD candidate at the Paris School of Economics. For documents, conversations and papers shared, the authors would like to thank Guillem Cassan, Daniel Cohen, Thomas Dickinson, Takasayu Ito, Raphael Kaplinsky, Eduardo Lora, Andrew Mold, Nanno Mulder, Marcelo Olarreaga, Richard Portes, and Chengsi Zhang. They also thank the anonymous reviewers who helped to improve the manuscript substantially. All errors and opinions remain the sole responsibility of the authors.

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PREFACE

The Asian-driven commodity boom has affected the way emerging countries pursue macroeconomic policy. Raw-material exporters, the subject of this paper, have benefitted from increased revenues and have often used their windfalls to consolidate fiscal positions. Ensuring appropriate fiscal responses in a context of high commodity prices is not a straightforward affair, however, and Africa and Latin America as commodity-exporting regions have shown diverse and often contrasting responses to the question of fiscal management in a time of commodity boom. This paper seeks to analyse the macroeconomic response of a sample of countries in these two regions, with emphasis on fiscal policy. Using a sample of 56 countries over 1987-1999 and 2000-2005, the authors compare fiscal responses in both regions before and during Asia’s current commodity boom. They define selection and control groups for each region, based on the impact of commodity demand and prices in the economy. The overall assessment of the net macroeconomic policy in these regions is cautiously optimistic. Commodity-exporting countries have realised clear benefits from the current boom, offsetting pro-cyclical fiscal policy and increasing foreign-exchange reserves. They have also broadened their client base for export, retired costly debt and improved credit profiles. Moreover, negative over-specialisation effects that might have resulted from the commodity boom have been less pronounced than is often feared. These findings suggest that effective macroeconomic management is possible for resource-rich countries. The success of certain countries’ policies in this field is a reassuring sign that shifting global wealth need not be squandered, but can make positive contributions to development.

Javier Santiso Director OECD Development Centre August 2008

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RÉSUMÉ

La forte croissance enregistrée par la Chine et l'Inde a permis aux pays exportateurs de matières premières d'améliorer substantiellement leurs termes de l'échange et d'enregistrer des afflux de capitaux conséquents. A long terme, le défi pour ces pays, aux institutions souvent fragiles, sera d'éviter de tomber dans la trappe de la malédiction des matières premières. Le travail ici présenté se propose d'analyser de manière comparée les réponses en matière de politiques économiques de la part des pays qui bénéficient de cette nouvelle manne, en contrastant en particulier les expériences africaines et latino-américaines. On souligne en premier lieu les liens macro-économiques entre les locomotives asiatiques (Chine et Inde) et ces deux régions. Ensuite, on discute les réponses économiques optimales face à ce choc de demande positif. Enfin, on présente les résultats empiriques et, en particulier, les réponses macroéconomiques en matière budgétaire et commerciale des pays bénéficiaires puis on évalue les bénéfices et les défis aussi bien pour l'Afrique que pour l'Amérique latine. Mots clefs : boom des matières premières; locomotives asiatiques; Afrique; Amérique latine; maladie hollandaise. Classification JEL : F00; O11; 057; E62.

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ABSTRACT

Strong growth in China and India has led to improvements in raw-material exporting countries' terms of trade and attracted complementary finance. The long-term challenge for these countries, where institutions are often fragile, is to avoid the so-called “resource curse”. This paper aims to provide a comparative perspective between policy choices in commodityexporting countries, contrasting the experiences of Africa and Latin America. First, it highlights global macroeconomic links between the Asian Drivers (China and India) and these regions. Second, it discusses optimal policy responses from a macroeconomic and institutional perspective. Third, it presents empirical evidence on macroeconomic, particularly fiscal responses to Dutch disease and the specialisation effects caused by Asian Drivers' demand and assesses the benefits and challenges offered by the Asian Drivers from a macro perspective for both Africa and Latin America. Keywords: commodity booms; Asian Drivers; Africa; Latin America, Dutch disease. JEL Classification: F00; O11; 057; E62.

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I. INTRODUCTION

The “Asian Drivers” (AD), China and India, growing at unprecedented rates and rapidly integrating their huge labour forces into the world economy, have together accounted for over a third of global output growth every year since 2001. This has helped hold world growth above the four per cent threshold necessary to improve the terms of trade for primary-commodity producers. By investing their huge foreign exchange reserves in US securities, they have also contributed to low US interest rates and ratcheted up raw-material prices. This in turn has pushed down developing-country spreads and improved their firms’ access to private capital. Commodity producers have benefited from higher global demand for their exports and from improved terms of trade. The Asian Drivers’ need to secure access to natural resources to fuel resource-intensive growth has attracted complementary finance to the commodity producers, both from the AD directly (e.g. infrastructure loans) and from global investors eager to cash in on the boom. In parallel, China’s and India’s growing demand for commodities has served to diversify export clients away from OECD countries. As a result, African and Latin American commodity exporters have enjoyed important windfall profits. Such windfall profits imply challenges, particularly to macroeconomic policy. By diverting resources from non-raw material sectors and contributing to real exchange-rate appreciation, a price boom runs the risk of locking developing-country commodity exporters into what Leamer called the “raw-material corner”, with little scope for industrial progress or skills advancement. In order to avoid this “Dutch disease”, resource-rich Africa and Latin America must find ways to capitalise on windfall gains by promoting job-rich sectors. Policy responses such as managed currency floats, reduced short-term debt or higher foreign-exchange reserves and, above all, a countercyclical fiscal stance, may mitigate the negative effects of a raw-materials boom. This paper looks at how macroeconomic policy in a sample of African and Latin American countries has dealt with the AD-related commodity boom. Comparing their macro responses to those of a control group, it examines consumer-price inflation indices, real effective exchange rates, official reserves and short-term debt, fiscal response functions and Dutch-disease indicators in order to assess the policy responses.

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II. IMPACT CHANNELS

The integration of the Asian giants into the world economy has dramatically changed the nature of global macroeconomic and financial interdependence (Reisen et al., 2004). This has in turn shaped primary-commodity markets. This section identifies the main channels through which the Asian Drivers have affected the macroeconomic positions of commodity-exporting countries in Africa and Latin America, providing important opportunities for emerging economies. The sheer size of the Asian Drivers, their phenomenal rates of growth and their growing economic and political power re-shape the world economy. They provide both competition and opportunities across the board to major trading partners in OECD countries, to developing countries and to other emerging economies (for Africa see Goldstein et al., 2006, and for Latin America see Santiso, 2007). These conduits differ from those that affect economies with important manufacturing sectors subject to increased Asian competition. 

Global output growth is a major determinant of primary-commodity prices. A recent estimate finds that world commodity prices move pro-cyclically with the growth rate of world industrial production, at around 1.5 per cent for every one per cent increase in world industrial output, with a one-quarter lag at the most (Bloch et al., 2004).

The barter terms of trade of primary commodities relative to finished goods rise if world industrial growth exceeds four per cent (Bloch et al., 2004). High global growth has recently halted and reversed the secular decline of commodity prices since World War II. Meanwhile, as Kaplinsky (2006) shows, the greater China’s participation in global finished-product markets, the more likely their prices will fall.

Lower US interest rates (which closely govern variations in global interest rates) have a generally positive impact on world growth, as higher output prospects and lower storage costs lead to higher raw-material prices. The accumulation of foreign-exchange reserves by Asian countries and their investment in US Treasuries have contributed to lower US rates. By the end of 2005, China and Hong Kong, China had accumulated more than one trillion dollars in foreignexchange reserves, of which 30 per cent were invested in US Treasury Bills, accounting for more than an eighth of all outstanding bills. In 2006, China began to lower the share of reserves invested in US treasuries.

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DEV/DOC(2008)6 

A weakening US dollar will also raise raw-material prices through similar effects and because most commodity prices are denominated in US dollars.

Recycling of petrodollars exceeded an estimated one trillion dollars by early 2007. As net exporters of capital, oil exporters also contribute to lowering the cost of capital for developing countries. Investors looking to recycle petrodollars or commodity dollars have engaged increasingly in the purchase of developingcountry assets (Lubin, 2007).

Asian Drivers’ Impact on Determinants of Raw-Material Prices The Asian Drivers’ contribution to global output growth has been substantial, at least 35 per cent since 2001 (Table 1). Their own surging growth has helped maintain global output growth far above the four per cent threshold from which the terms of trade for primarycommodity producers improve (Goldstein et al., 2006). Table 1: The Asian Drivers’ Contribution to Global Growth, 2000-2007 2000

2001

2002

2003

2004

2005

2006

2007

7.0

5.0

4.8

6.1

8.0

7.1

6.7

6.7

China (see note)

18.1

27.2

30.0

27.8

23.8

27.2

28.1

27.9

India (see note)

5.9

7.0

7.5

8.9

7.3

8.2

7.7

7.9

Annual cent)

global

growth

(per

Note: The contributions to world growth are calculated as each country’s growth rate times its percentage share in world output divided by the sum of its growth rate plus the growth rate of the rest of the world, weighted by its share in world output. Calculations are on a PPP basis. Source: Authors’ calculation based on the IMF World Economic Outlook Database.

The China-driven “super cycle” — a significant rise in real commodity prices — has been propelled by the middle kingdom’s urbanisation and industrialisation and reinforced by India’s growth. Commodity prices climbed from historical lows at the beginning of the decade to unusual figures in 2007. Figure 1 shows this for oil, for industrial and precious metals and for soft commodities. These commodities weigh most heavily in African and Latin American export baskets and positively impact their growth. According to Collier (2007) the boom added nearly 2.5 percentage points to the growth of the typical African economy in both 2005 and 20061.

1

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Collier and Goderis (2007) also underscore the importance of distinguishing between non-agricultural (depletable, location bound) and agricultural (replenishable) resources.

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DEV/DOC(2008)6 Figure 1: Price Indices for Selected Commodities (January 2001 = 100)

Source: OECD Development Centre and African Development Bank (2008), African Economic Outlook 2008, Paris, OECD

Volatility of demand tempers the benefits to African and Latin American exporters of China’s and India’s thirst for commodities. It arises partly from cyclical variations and partly from arbitrage between domestic production and imports. Goldstein et al. (2006) examine the volatility of demand (measured as the standard deviation around the trend) for commodity exports relevant to Africa. It rose between 2000 and 2004 for oil, cotton and industrial minerals except copper. Although it is difficult to separate the relative contributions of different factors, the rise may relate partly to China’s and India’s roles as swing producers, exporting when prices are high and stockpiling when (for cyclical or exceptional reasons) they are not as attractive 2. Given the size of their economies, any behavioural change translates into volatility in world prices3.

2

Moreover, as multinational corporations produce a large share of manufacturing exports from China, high demand for raw materials partially reflects relocation of raw material demand from production sites elsewhere. Such adjustments do not occur without friction, which in turn may fuel demand volatility.

3

Another source of volatility lies in commodity-related capital inflows. FDI, portfolio equity flows and project loans have been on the rise for developing countries in recent years. Since the early 2000s, i.e. since the global re-emergence of China, foreign direct investments (FDI) in Africa have tripled. According to the African Economic Outlook 2007, the inward flows of FDI in Africa jumped from less than $10 billion in 2000 to more than $30 billion in 2005 (the total cumulated inflows over the period have passed the of $100 billion threshold). The annual flow of FDI from China to Africa also has tripled since the beginning of the 2000s (Mühlberger, 2007). The Asian Drivers have become new actors in capital investment in African markets. China not only has increased its FDI in Africa, but also has multiplied loans and trade credit lines all around the continent (Goldstein et al., 2006), particularly in countries for which oil and gas provide an important share of export proceeds. Natural resources, especially oil and the required network infrastructures are the destinations for Chinese project lending.

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III. THE MACROECONOMIC CHALLENGES OF COMMODITY BOOMS The Asian commodity boom has produced stark macroeconomic policy challenges, bringing to the fore new problems relating to choices of currency regimes, ensuring countercyclical fiscal policy and reserve and asset management. A clear understanding of the character and persistence of the AD commodity boom is fundamental to macroeconomic policy formulation to deal optimally with its effects, which can change and shift over time. Goldstein et al. (2006) argue, for example, that prospective growth patterns of the Asian Drivers, especially China, could boost their domestic consumption and globalise services and eating habits. This would imply a shift in raw-commodity demand patterns away from iron ore, copper and other industrial minerals toward soft commodities.

Exchange Rates and Exchange-Rate Regimes Sub-Saharan African countries, often heavily dependent on commodity exports, account for half of the world’s “commodity-currency” countries. On average, movements in real commodity prices alone account for over 80 per cent of the variation in the real exchange rates of these 22 countries — a surprisingly strong result (Cashin et al., 2003). While the variability of real effective exchange rates is similar across the various nominal exchange-rate regimes, the variability of relative prices takes a larger relative share of it in countries with pegged nominal rates. Theory (e.g. Chen and Rogoff, 2003) tells us that, for economies prone to frequent real external shocks, flexible nominal exchange rates facilitate the smoothing of real output to such shocks, especially when domestic wages and prices change slowly. Following a positive real shock (such as a rise in the world price of a key export), a nominal appreciation lowers the domestic price of exported goods (partially offsetting the rise in the international price) and reduces real wages in line with reduced labour demand. In contrast, when countries with inflexible nominal exchange rates experience such positive real shocks, prices and wages need to rise to ensure that employment and output are in equilibrium. Most low-income countries have preferred managed floats (unsterilised intervention on the foreign exchange markets to target the real appreciation needed to accommodate the commodity boom) to either pure floats or nominal exchange-rate pegs, for good reasons (Buffie et al., 2006): 

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With a commodity boom (just as with a surge in aid), a pure float results in nominal appreciation and, with sticky prices and wages as well as complementary capital flows, in exchange-rate overshooting such that output contracts in the nontradable sector and substitution effects drive the economy into recession.

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A currency peg allows a short-run spike in inflation. Bond sterilisation can dampen it, but at the cost of rising real interest rates, inciting further capital inflows. Sterilisation may also require bond sales on a scale exceeding the absorptive capacity of shallow domestic financial markets.

Reserves The rise of developing countries’ international reserves from commodity-export windfalls has opened new issues related to their optimal level and management. With increasing international financial integration, considerations regarding reserve adequacy have shifted from an emphasis on trade (traditionally associated with the “three-months-of-imports” rule) to financial-account and balance-sheet fragilities (associated with the “Greenspan-Guidotti” rule that reserves should cover short-term debt). Since the classical Baumol-Tobin inventory model with fixed costs of depleting and replenishing reserves, the literature has focused on the optimal level that developing countries should have (Jeanne and Rancière, 2006). Reserves tend to allow a country to smooth domestic absorption in response to sudden stops but they also yield a lower return than the interest rate on a country’s long-term debt. The optimal choice is not evident, however, because holding reserves involves social costs as well as financial costs.

Fiscal Policy Regardless of the exchange-rate regime, fiscal discipline is another basic requirement for avoiding macroeconomic complications with free capital flows. Because government generally serves as the conduit for mineral revenues to the rest of the economy, fiscal policy holds the key to managing booms (Gottschalk and Prates, 2007). According to Mundell (1962), once the capital account is open even imperfectly, monetary policy acquires a comparative advantage in dealing with external imbalances, with fiscal policy used to maintain internal balance. If governments do not use fiscal policy for stabilisation, they must use monetary policy for internal balance, thus violating the Mundell assignment rule. In countries with fiscally weak governments, the emergence of commodity booms may force such unstable assignments upon the authorities — i.e. fiscal policy does not tighten sufficiently to cope with the booms, monetary policy tries to hold down aggregate demand and in turn interest differentials widen, which reinforces the balance of payments surpluses. Confronted with commodity booms, governments should use fiscal policy to reduce demand for non-tradables, hence limiting unwarranted exchange-rate appreciation. They should aim to eliminate instability in aggregate demand and consequently real exchange rates by smoothing expenditure over time, which implies self-insuring against revenue downfalls. Next to expenditure restraint, revenue management is also important, for self-insurance and asset diversification. The ability to maintain expenditure during busts depends on prudence during booms.

Resource Management: Theory and Guidelines Economic theory offers useful insights into the optimal management of natural resources. One strand of literature focuses on the Hotelling Rule. The rationale behind this rule is arbitrage. A country should be indifferent between keeping a natural resource under the ground, in which © OECD 2008

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DEV/DOC(2008)6 case the return is the capital gain on the reserves, and selling it to invest the proceeds for a market rate of return. This requires that the price of the resource should grow at the world rate of interest and that under some conditions the rate of depletion should equal the demand elasticity times the world rate of interest (van der Ploeg, 2006). Another line of research investigates the optimality of the Hartwick Rule, which demands reinvestment of natural-resource revenues in productive assets. The World Bank has calculated that many resource-abundant economies do not follow the Hartwick Rule. In fact, many of them have negative genuine saving rates and become poorer each year (World Bank, 2006). Asset accumulation should not rest with the central bank, but should cover the public sector as well. There are good reasons to save part of the commodity bonanza — but how much? The long-run saving rule can apply to depletable resources. It uses the expected rate of increase in the commodity price, divided by the extraction rate. To illustrate, if the expected price increase is one per cent annually and the extraction rate is three per cent (sufficient reserves for 33 years of extraction at the present rate), then the economy can consume one-third of the extraction proceeds. Conversely, given a judgment that the current commodity price far exceeds its longrun level, then government should save all of the above-normal proceeds. Good theoretical reasons also argue for investing a substantial part of a windfall initially abroad, because the return to investment would fall below the world interest rate if it went entirely into domestic investment. Investing abroad offers an escape from diminishing returns. Governments can repatriate foreign assets gradually for domestic investment. They can employ the construction price-smoothing rule to dampen the rising capital costs typical of construction booms by deferring domestic investment until the booms abate. In practice, however, they may find an efficient balance between domestic and foreign assets politically difficult to sustain. Domestic debt repayment may solve this dilemma and be lucrative as long as domestic debt’s cost exceeds expected foreign returns. It has the added advantage of making foreign asset accumulation difficult to reverse by future predator governments. The management of commodity-price booms in low-income countries surely goes beyond the standard textbook prescription that might hold for OECD mineral producers like Australia or Canada. In all commodity exporters, the short-run growth effect of higher commodity prices is positive. In low-income countries, Collier and Goderis (2007), in a study covering 1960-2004, found a negative long-run effect for non-agricultural commodity exporters and a positive one for agricultural exporters. This could suggest a fundamental difference for the macroeconomic policies of hard and soft commodity exporters. Three factors relevant to any macroeconomic policy prescription can generate the adverse long-run effect, namely the classic “Dutch Disease”, the “Leamer Triangle” and volatility.

Dutch Disease A surge in resource exports leads to a real appreciation of the county’s exchange rate, and this hurts other exporters and producers in import-competing sectors. The phenomenon is known variously as the “Dutch Disease” (Corden and Neary, 1982), the “Gregory effect” and “de-industrialization”. A resource boom affects the economy through resource-movement and spending effects. For Dutch disease to arise and become serious for policy, other sectors must 14

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DEV/DOC(2008)6 exist for which the rise in the real exchange rate creates problems of competitiveness. Torvik (2001) showed that the conventional Dutch-disease effects may be overturned if there are productivity spillovers in both tradable and non-tradable sectors. Adam and Bevan (2006) examine the case where public infrastructure investment generates an inter-temporal productivity spillover for both tradable and non-tradable production, but in a potentially unbalanced manner. For example public investment in rural roads will likely have more impact on the production of (non-tradable) food crops than on urban-based (tradable) manufactures and vice versa for, say, telecommunications infrastructure. Collier and Goderis (2007) find that Dutch Disease, although significant, can explain only a minor part of the long-run negative growth effect of higher non-agricultural commodity prices.

The Leamer Triangle This concept may have more relevance to the impacts of both the resource booms and the commodity price volatility that the Asian Drivers tend to exert on resource-rich economies. Leamer (1987), using a three-factor, multi-good model showed that resource-rich countries can take development paths very different from resource-poor countries. The corners of the Leamer Triangle represent three factors of production: labour, natural resources, and physical as well as human capital. A natural-resource discovery, for instance, swings a country’s endowment point directly toward the resource corner. The Leamer analysis points to four problems connected to such a resource boom (see also Leamer et al., 1999, and Alvarez and Fuentes, 2006). First, the absorption of low-skilled labour that goes along with the development of manufacturing is foregone; hence, inequality is deepened. Second, those manufacturing activities that do emerge are capital intensive and skill intensive. Third, human capital accumulation may be impeded, as skills in the resource sector are very specific and spillovers limited. Fourth, volatility in the prices of raw commodities may raise capital risk in resource-dependent, undiversified countries, which might deter investment and make it more difficult for other tradable activities to emerge.

Volatility Volatility is important for the growth paths of developing countries. Countries whose fundamentals have experienced significant variations (e.g. Brazil or Mexico in the 1990s) have had strong growth fluctuations, and the negative correlation between both variables has been stressed elsewhere too (Hnatkovska and Loayza, 2004). Aghion and Marinescu (2006) emphasise the effect of fiscal policy, where counter-cyclical budgets foster innovation and growth by easing the impact of shocks on innovating firms. Consistently, they find that pro-cyclical public-debt growth correlates negatively with economic growth. Therefore, countercyclical public-debt growth tends to enhance economic growth, especially with weak financial development. In practice, fiscal policy in many developing countries tends to display the opposite properties; it is pro-cyclical (Hausmann and Gavin, 1996). Government spending as a share of GDP goes up during booms and down in recessions, while deficits increase in booms and decrease in recessions. In some but not all commodity-exporting countries, governments act as “trustees” of national resources and are important recipients of the mineral rents. Tornell and Lane (1999) advanced a political explanation particularly relevant for commodity-dependent countries. When more resources are available (i.e. in booms), a “common pool problem” becomes more © OECD 2008 15


The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 severe and the fight over common resources intensifies, leading to budget deficits. This problem seems less relevant for agriculture-based economies because they do not normally produce rents (the surplus of export revenue over the cost of production). In contrast, non-agricultural commodities provide persistent, location-specific rents, the bulk of which accrue to governments (Collier, 2007). Table 2 below tries to summarise all of the foregoing, rather dense discussion of the optimal management of natural resources. It draws on the discussion to highlight the basic elements of a decision framework common to most commodity-exporting countries, associating those elements with essential rules that could make the paths to wise decisions clearer for policymakers in those countries. Table 2: Managing Public Sector Commodity Booms Decision How much to deplete? Arbitrage: The country should be indifferent between keeping the natural resource under the ground (in which case the return is the capital gain on the reserves) and selling it and getting a market rate of return on the invested proceeds.

How much to save?

Rule 1.

Hotelling/Solow Rule: the price of a natural resource should grow at the world rate of interest and under some conditions the rate of depletion should equal the demand elasticity times the world rate of interest.

2.

The steady-state depletion rate is capital return minus population growth, so that societies with fastgrowing populations should deplete their natural resources less rapidly.

1.

Hartwick Rule. If there is no population growth, to sustain a constant income per capita all resource rents must be invested in capital, including education. If consumption per head were rising (falling) over time, social welfare could be increased if earlier (later) generations saved and invested less or consumed capital at the expense of later (earlier) generations.

2.

Commodity price smoothing rule. Unlike the savings generated by the Hartwick rule, these savings are intended to finance subsequent consumption during periods when the commodity price is below its long run path. There is thus a strong case for holding these assets in liquid form, which implies the acquisition of financial assets abroad.

1.

Excess return of home investment

2.

Construction price smoothing rule

To maximise intergenerational HH utility, which saving rate sustains stable consumption per capita? Consuming rents from exhaustible resources is literally consuming capital. Stabilisation and diversification concerns rule the mid-term saving decision Fiscal policy is superior to monetary policy to deal with the first; active diversification involves use of funds for new activities (e.g. Norway and Chile).

How much to invest at home?

How much to invest abroad vs. retire public debt?

Excess cost of public debt over global return

Source: Based on discussion in van der Ploeg (2006) and Collier (2007).

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IV. SOME RECENT POLICY EVIDENCE

This section focuses on 2000-2005. It examines the extent to which authorities in the commodity-boom economies of Africa and Latin America followed the policy script outlined above and how this helped contain inflationary pressures, escape excessive specialisation effects, avoid being “Leamer-cornered” and reduce vulnerabilities to possible future currency attacks. One can assess the Asian Drivers’ impact on these regions by decomposing demand effects and price effects in different commodity markets. Selection and control groups are defined in each region. Regarding the demand effect, the selection group includes countries where the Asian Drivers weigh particularly strongly in terms of shares of both a country’s export receipts and Gross Domestic Product (GDP). Countries displaying values below the regional median should fall into the control group (Table 3). The price effect is captured differently, looking at the relationship between commodity prices and export shares. The methodology is similar to the one used by Kamin et al. (2006) who assess the impact of Chinese exports on U.S. import prices. Their hypothesis is that if Chinese export prices are lower or falling more rapidly than those of other countries, then those types of goods with particularly high or rising shares of imports from China should be experiencing low rates of price inflation. This should result in negative correlations across end-use sectors, between import price inflation and the level/change of import shares from China. Likewise, we test if the increase in commodity import shares from China has affected commodity prices. The hypothesis is that the rise in the Asian Drivers’ demand for commodities has boosted prices, creating a heterogeneous effect depending on trade structure and commercial partners for each country. Data come from the UN/Comtrade database, SITC Revision 3 classification. Initially the estimated equation is as follows:

Pi ,t , main _ com   0  1 * import _ ADt , main _ com   2 * import _ ADt  n , main _ com  it where Pt , main _ com represents the percentage change in the price of the main commodity export for country i to the rest of the world, import _ ADt ,main _ com is the country’s import share for the commodity by the Asian Drivers at time t and import _ ADt n ,main _ com is their initial import share.

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 The last term in the equation is important because it captures initial conditions external to the demand for commodities. Ideally, import prices or unit values from China should be used to estimate the equation. However, due to data availability, we assume (and use) standard world market prices for all commodities. The main commodity export for each country is specified in columns Table 3. Then, global commodity indexes are used for each good. The parameter  1 (not reported) is estimated for each country and captures the relationship between price fluctuations and import shares. Since both variables are in percentage change, the significance and magnitude of  1 denote an effect of Asian demand on prices. Finally, countries whose import share to the Asian Drivers was strong, and where import shares explained significantly the variability of its main commodity price, where included in the selection group. The final selection and control groups for both regions are presented in Table 3. Table 3. Selection and Control Groups Annual observations covering the period 2000-2005. Latin America

Country

Selection Groups

Median Values

Control Groups

Exports to Asian Memo: Exports Drivers/Total to Asian Exports (Avg. Drivers/GDP 2003-05) (Avg 2003-05)

Chile Peru Argentina Brazil Uruguay Paraguay Costa Rica Panama

0.115 0.099 0.097 0.068 0.041 0.029 0.027 0.024

0.040 0.021 0.012 0.010 0.006 0.006 0.009 0.002

L. America

0.024

0.002

Colombia Bolivia Mexico Honduras Venezuela Guatemala Ecuador Nicaragua

0.009 0.009 0.007 0.007 0.006 0.006 0.005 0.004

0.002 0.002 0.002 0.002 0.002 0.001 0.002 0.001

Africa

Main Export

Copper Metalliferous ores Petroleum Transport equipment Meat Oil-seeds Electrical machinery Fish products

Petroleum Gas Electrical machinery Coffee Petroleum Clothing Petroleum Coffee

Country

Exports to Asian Memo: Exports Drivers/Total to Asian Exports (Avg. Drivers/GDP 2003-05) (Avg 2003-05)

Benin Gabon Senegal Nigeria Tanzania Egypt South Africa Mali Morocco Zambia Cameroon Madagascar

0.382 0.150 0.141 0.105 0.098 0.078 0.045 0.042 0.042 0.039 0.037 0.030

0.041 0.019 0.035 0.017 0.011 0.003 0.012 0.009 0.010 0.014 0.008 0.002

Africa

0.030

0.007

Cote d'Ivoire Mozambique Kenya Ghana Tunisia Malawi Mauritius Uganda Algeria Niger Burkina Faso Botswana

0.027 0.026 0.020 0.016 0.010 0.010 0.009 0.008 0.007 0.003 0.000 0.000

0.017 0.007 0.002 0.006 0.004 0.003 0.003 0.001 0.002 0.000 0.000 0.000

Main Export

Raw cotton Petroleum Inorg acids Petroleum Gold Fuel oils,nes Platinum Gold Inorg acids Copper Petroleum Coffee/Vanilla

Cocoa Aluminium Tea Cocoa Petroleum Tobacco Sugar Coffee Petroleum Uranium Raw cotton Minerals

Note: The dominant commodities per country in Africa were mainly gold (Burundi, Tanzania), textile fibres (Benin), petroleum (Egypt, Cameroon, Sudan, Senegal), non-ferrous metals (South Africa, Zambia), coffee (Ethiopia), apparel/clothing (Tunisia, Morocco) and tobacco (Zimbawe). For Latin America the predominant commodities were petroleum (Venezuela, Colombia, Ecuador), copper (Chile), gas (Bolivia), metalliferous ores and metal scrap (Peru), and coffee, tea, cocoa and other grains (Honduras, Nicaragua, El Salvador).

The subsequent discussion is structured along the rising degree of endogeneity of macroeconomic variables. It starts by estimating fiscal response functions for the various country 18

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DEV/DOC(2008)6 groups, both for government spending and government deficits. It then takes the GreenspanGuidotti indicators as evidence for the effectiveness of currency regimes employed and lower exposure to short-term debt achieved. This in turn leads to a discussion of inflation trends and developments in real effective exchange rates.

Government Budget Response Function Fiscal response functions are estimated for both government spending and budget deficits or surpluses (as percentages of GDP). For the first of two different estimation periods, the analysis assesses the degree of pro-cyclical behaviour for a set of Latin American and African countries during 1987-1999. Second, it focuses on the recent upsurge of commodity prices and the terms of trade for these countries, to assess their impact on public revenue management during 2000-2005. The equation is estimated for the whole sample of countries and for the selection and control groups. A Hausman test on each sample supports the fixed-effects estimation. The estimation procedure follows Alesina and Tabellini (2005) and Jimenez and Tromben (2006). The following equation defines the first panel regression:

Fit   0  1 * output _ gapit   2 * Fit 1   3 * TOT it   4 * Z it   it where Fit is an indicator of fiscal policy (government expenditure). The output gap measures the business cycle, TOT it is the terms of trade, and Z it is a set of variable controls. Information on government expenditure and some controls for this period comes from the World Development Indicators (World Bank) and International Financial Statistics (IMF). The output gap is calculated as the log deviation of real GDP from its Hodrik-Prescott trend. Identically, TOT it is a deviation of the terms of trade from its Hodrik-Prescott filtered trend, also obtained from the World Development Indicators. In this equation, a positive value for the output-gap coefficient (  1 ) denotes pro-cyclical behaviour. The measure compares the actual GDP (output) of an economy and the potential GDP (efficient output). When an economy has a positive or negative output gap, it runs at an inefficient rate, either overworking or underworking its resources. Theory suggests that a positive output gap will lead to inflation as production and labour costs rise. For countries with full fiscal control, the null hypothesis is that varying output gaps, the terms of trade or AD shares in exports will not affect government spending; the authorities fully respect the only objective, to smooth government spending over different states of nature. In contrast, countries without fiscal control and hence with pro-cyclical behaviour (due to rentseeking, fragile institutions, etc.) should show significant positive correlation coefficients for government spending and varying output gaps as well as the terms of trade. Many would find unsurprising such a positive association with AD export shares as well, arguing that the Asian Drivers tend to engage particularly in countries with weak governance scores. The regression shows (Table 4a) that Latin America had significant pro-cyclical behaviour during 1987-1999, but not in 2000-2005, indicating increased fiscal control. The inconclusive results for Africa do seem to suggest a high degree of volatility in public spending. © OECD 2008

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 In the OECD group added for comparison, the results indicate fiscal discipline for both subperiods as the output gap does not exert a significant impact on government expenditure. Table 4a. Government Expenditure Response: All Countries

output_gap lag_gov_exp terms_trade Observations No. of id_gen R-squared

Latin America 4.78e-11* [1.92] 0.75*** [16.73] 8.07e-13* [1.79] 207 16 0.6

1987-1999 Africa 5.03E-11 [0.27] 0.4753*** [9.46] -2.7668e-12*** [2.70] 318 25 0.28

OECD 2.53E-13 [0.17] 0.7842*** [16.10] 2.48E-13 [1.36] 195 15 0.65

output_gap lag_gov_exp terms_trade Observations No. of id_gen R-squared

Latin America 2.53E-12 [0.09] 0.3450* [1.93] -1.85E-13 [0.89] 89 16 0.07

2000-2005 Africa -5.8470e-10*** [2.98] 0.5717*** [6.75] 2.05E-13 [0.32] 144 25 0.31

OECD -3.02E-12 [1.46] 0.6558*** [6.39] -4.69E-14 [0.23] 72 15 0.47

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

The following regression takes into account the selection (Table 4b) and control (Table 4c) groups in each region in order to find further differences. Table 4b confirms the existence of pro-cyclical behaviour for the Latin American selection group during 1987-1999. During 2000-2005, the null hypothesis of non-significance for the output gap cannot be rejected, and therefore one can assume that non-cyclicality prevailed. While the signs of the output gap turn from positive to negative in the African selection group (indicating a move toward an anticyclical stance), they are not significant in either period. In contrast, the African control group displays a surprisingly significant anti-cyclical response of public spending in both periods and for both explanatory variables, i.e. the output gap and the terms of trade. To confirm the robustness of results, a second set of regressions estimated for the samples used the growth rate of government expenditure. They neither added to nor modified the outcomes reported here. Table 4b. Government Expenditure Response: Selection Group 1987-1999 Latin America

output_gap lag_gov_exp terms_trade Observations Number of id_gen R-squared

3.8198e-11** [2.25] 0.7746*** [13.30] -4.2171E-13 [0.51] 103 8 0.68

2000-2005 Latin America

Africa

2.05E-10 [1.06] 0.4904*** [7.33] -2.6502E-12 [1.02] 151 12 0.3

output_gap lag_gov_exp terms_trade Observations Number of id_gen R-squared

1.0716E-11 [0.24] 0.6225* [1.79] -1.8463E-13 [0.41] 45 8 0.1

Africa

-2.14E-10 [1.29] 0.2270*** [2.71] 3.3567E-12 [0.78] 66 12 0.14

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

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DEV/DOC(2008)6 Table 4c. Government Expenditure Response: Control Group

output_gap lag_gov_exp terms_trade Observations Number of id_gen R-squared

Latin America 7.2943E-11 [1.18] 0.7533*** [11.48] 9.5359E-13 [1.55] 104 8 0.59

1987-1999 Africa -1.1254e-09** [2.07] 0.4353*** [5.76] -2.9224e-12** [2.54] 167 13 0.29

OECD 2.53E-13 [0.17] 0.7842*** [16.10] 2.48E-13 [1.36] 195 15 0.65

Latin America -1.0326E-11 [0.43] 0.11 [0.83] -2.0351E-13 [1.40] 44 8 0.12

2000-2005 Africa -1.5932e-09*** [4.00] 1.0084*** [8.04] 9E-14 [0.15] 78 13 0.58

OECD -3.02E-12 [1.46] 0.6558*** [6.39] -4.69E-14 [0.23] 72 15 0.47

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

The next step took government budget balances as a proxy (dependent variable) for fiscal policy. The data, expressed as percentages of GDP, come from The Economist Intelligence Unit, the OECD African Economic Outlook and Jimenez and Tromben (2006). The null hypothesis says that countries with fiscal discipline will show a significant positive correlation between government budget balances and varying output gaps and terms of trade. To save for bad days in good times is a precondition for governments’ ability to smooth public spending over economic cycles. Absence of a significant positive correlation would indicate a pro-cyclical fiscal stance and hence potential macroeconomic complications, such as higher price levels for nontradables leading to higher inflation levels and higher real currency appreciation than that warranted by the fundamental equilibrium exchange rate. Tables 5a through 5c report the results. Table 5a. Government Budget-Balance Response: All Countries Latin America output_gap

lag_budg_bal

terms_trade Observations No. of id_gen R-squared

5.45E-11 [1.49]

1987-1999 Africa -3.62E10 [0.60]

0.28***

0.1232

[3.71]

[1.31] 4.70e11*** [3.23] 140 23 0.13

1.00e-12** [2.42] 146 15 0.19

OECD 9.14E13 [0.22] 0.85** * [16.75 ] 8.02E13 [1.30] 167 15 0.66

Latin America output_gap

lag_budg_bal

terms_trade Observations No. of id_gen R-squared

2.76E-11 [1.10]

2000-2005 Africa 1.05e09*** [3.57]

OECD 1.70e11** [2.33]

0.45***

0.08

0.33**

[4.07]

[0.97]

2.84E-13 [1.39] 90 15 0.27

2.23E-14 [0.02] 138 23 0.11

[2.49] 1.19E12 [1.37] 84 14 0.23

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 Table 5b. Government Budget-Balance Response: Selection Group 1987-1999 Latin America

output_gap lag_budg_bal terms_trade Observations Number of id_gen R-squared

5.76E-11 [1.19] 0.24** [2.12] 2.08e-12** [2.34] 75 8 0.15

2000-2005 Latin America

Africa

-1.16E-09 [1.40] 0.1 [0.67] 4.45e-11** [2.48] 58 12 0.21

output_gap lag_budg_bal terms_trade Observations Number of id_gen R-squared

1.65E-11 [0.60] 0.42*** [3.06] 9.95e-13*** [2.90] 48 8 0.42

Africa

1.09e-09*** [3.63] 0.11 [1.05] -1.95e-11*** [2.87] 72 12 0.27

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

Table 5c. Government Budget-Balance Response: Control Group

output_gap lag_budg_bal terms_trade Observations Number of id_gen R-squared

Latin America 5.11E-11 [0.94] 0.29*** [2.78] 8.51E-13 [1.55] 71 7 0.21

1987-1999 Africa 2.2330e-09** [2.28] 0.08 [0.73] 1.7810e-10*** [2.75] 82 11 0.15

OECD 9.14E-13 [0.22] 0.85*** [16.75] 8.02E-13 [1.30] 167 15 0.66

Latin America 4.93E-11 [1.04] 0.44** [2.55] 1.53E-14 [0.06] 42 7 0.22

2000-2005 Africa 1.20e-09* [1.79] 0.15 [1.16] 2.73E-13 [0.26] 66 11 0.08

OECD 1.70e-11** [2.33] 0.33** [2.49] 1.19E-12 [1.37] 84 14 0.23

Absolute value of t-statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

During 1987-99 in both Africa and Latin America shifts in the terms of trade played a significant role in explaining changes in government budget balances, which rose with the terms of trade. This terms-of-trade effect later lost significance in both regions (Table 5a), suggesting less direct dependence of government finance on raw materials. In the AD selection group (Table 5b), however, the terms of trade continued to exert an important impact on government budget balances. In both Africa and the OECD sample, the output gap has had significance in explaining budget balances since 2000, suggesting a stronger anti-cyclical fiscal stance, but no detectable statistical significance appears for the output-gap variable in Latin America. These findings suggest, perhaps surprisingly, that as the AD-driven commodity boom gained full traction, African countries on average outperformed Latin America in managing macroeconomic policy challenges and making monetary policy easier with anti-cyclical fiscal stances.

Respecting the Guidotti-Greenspan Rule: Higher Reserves, Lower Debt A rise in commodity proceeds should affect neither the level of foreign exchange reserves nor the level of short-term debt if a pure float in the exchange rate fully accommodates it. In theory, only the nominal exchange rate would appreciate, immediately on impact. Any other currency regime, from a hard peg to a dirty float, will translate into a rise of the GuidottiGreenspan indicator, the level of official foreign exchange reserves as a fraction of the country’s short-term foreign debt. For countries where this indicator has been below one, any rise above 22

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DEV/DOC(2008)6 one can be interpreted as a step toward lowered exposure to a speculative currency attack by foreign and domestic investors, as debt easily repaid is less than the reserves needed to defend the exchange rate. Figure 2 relates official foreign exchange reserves and short-term external debt. Ideally, the indicator could broaden to include all liquid assets held abroad instead of official reserves only and all liquid liabilities, both external and domestic, but data availability precludes establishing such time series. The figure shows improvements in the Guidotti-Greenspan indicator to exceed one in all sample countries. The Asian Drivers’ commodity boom has indeed worked to reduce vulnerability to future speculative attacks. Argentina, Cameroon and Gabon especially appear to have managed to shift away from the danger zone. The rest of the selection group countries show even more comfortable values. Figure 2: Ratio of Foreign Exchange Reserves to Short Term Debt – Selection Group

100

10

10

2005

2004

2003

2005

2004

2003

2002

2001

2000

1999

1998

1997

0.001

1996

0.001

1995

0.01

2002

Zambia 0.01

© OECD 2008

Tanzania

2001

Madagascar

0.1

2000

Egypt

1999

0.1

South Africa

1998

Mali

Gabon

1997

Benin

Nigeria 1

1996

Cameroon 1

1995

.

100

% (Logarithmic Scale)

% (Logarithmic Scale)

.

Africa

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 Latin America 10

Argentina Brazil 1

Chile Costa Rica

Panama Peru 1

Uruguay Paraguay

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

0.1

1995

0.1

% (Logarithmic Scale) .

% (Logarithmic Scale) .

10

Source: OECD Development Centre, computed from the World Bank Global Development Finance Database, 2008.

Changes in debt composition, maturities and structure have contributed importantly to these improved indicators. Figure 3 displays some evidence for lower shares of short-term paper in total domestic debt. The risk posed by debt management to the current commodity boom has therefore differed greatly from that during prior commodity shocks, in particular the 1970s experience that ended up causing Latin America’s 1980s debt crisis (Blommestein and Santiso, 2007). Since the global re-emergence of China, exchange rate-indexed debt also has come down throughout Latin America, most impressively in Brazil, where its share fell from 37 per cent of total public debt in 2002, the year of the crisis, to 2.3 per cent in early 2006. The reallocation towards more local-currency debt also induces a change in the risk profile of sovereign issuers. Foreign-currency debt is decreasing, although this has produced shorter debt maturities in some countries. Things are changing quickly, however, as some other emerging bond issuers begin to issue bonds in local currencies with maturities over ten years (e.g. Mexico). Figure 3: Short Term Domestic Debt in Emerging Markets 70

. . % Domestic Debt

60

1996

50

2004

40 30 20 10 0 Brazil

Mexico

Chile

Venezuela

India

Colombia

China

Russia

Source: Blommestein and Santiso, 2007.

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DEV/DOC(2008)6 Over the past decade, current account surpluses in most emerging markets have enabled them to reduce external debt. This has helped to reduce a major source of vulnerability (to liquidity crises in particular), namely the net open forward positions in hard currencies taken by some central banks. Such positions played a key role in the collapse of the Thai baht in 1997 and were an important source of weakness for South Africa until it trimmed down its forward book in 2003. In some cases, external debt has been reduced by drawing on reserves. In 2005, Brazil repaid the IMF and the Paris Club creditor countries, and in 2006 it paid off all its remaining Brady bonds ($6.6 billion). Brady bonds had kick-started the emerging-market bond boom in the 1990s (albeit partly funded by new external debt), officially ending the debt restructuring process of the 1980s. Argentina followed the Brazilian example, repaying its outstanding debt to international financial institutions. In 2006, Nigeria became the first African country to cancel its Paris Club debt ($30 billion), with one-third repaid and the rest forgiven. Self-insurance through reserve accumulation continues.

Inflation and Real Effective Exchange rates Figure 4 focuses on the selection-group countries of Africa and Latin America, where China’s commodity import demand is most felt. It reveals a picture of emergent macroeconomic stability during 2000-2006, with inflation and real effective appreciation well contained. Strong appreciation of the real effective exchange (REER) — exceeding 50 per cent — did occur in Zambia in particular, reflecting not just higher commodity prices but also simultaneous debt relief and renewed capital inflows4.

4

Following Collier (2007), Chile and Zambia provide contrasting examples of the consequences of different public savings strategies for the real exchange rate in 2005, when the world price of their common commodity export, copper, was exceptionally high. The Government of Chile saved all the incremental revenue, whereas Zambia continued to run a fiscal deficit. During 2005, the real exchange rate mildly depreciated in Chile despite the boom, whereas in Zambia it appreciated by around 80 per cent, causing intense problems for non-copper exports. Note, however, that the equilibrium exchange rate may have appreciated more in Zambia than in Chile as the former benefited from important debt relief measures. Therefore, the fundamental equilibrium exchange rate may have appreciated correspondingly.

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 Figure 4: Real Effective Exchange Rates and CPI Inflation in Selection-Group Countries Africa

Cameroon

2

60

800

50

700 600 500

1995

2003

2001

1999

2005

7

10

100 98

6

0

90 88

2

-5

86

0

3

Tanzania

2005

2003

2001

4

40

2

20

0

0

Zambia REER

Inflation (right axis)

140

30

120

25

100

20

80

15

Inflation (right axis)

50

160 140 120 100

40 30

0

2005

2003

2005

0

2003

0

2001

10

0

1999

20

40 20

1997

20

5

10

40

1995

80 60

60

2001

6

60

2005

2005

2003

2001

85

80

2003

90

8

100

2001

95

10

120

1997

100

Inflation (right axis)

140

1995

105

2005

2003

2001

0

REER

9 8 7 6 5 4 3 2 1 0 -1

1999

50

South Africa Inflation (right axis)

110

1997

100

1999

1

1997

1995

0

1995

150

1999

4

Senegal

200

1997

5

200 100

REER

80 70 60 50 40 30 20 10 0

1999

102

96

Inflation (right axis)

250

Inflation (right axis)

15

94 92

2005

2003

2001

1999

1997

-10

REER

1995

0

1997

0

2005

10

1995

20

5

2003

20

1995

40

400 300

2001

30

1995

60

Inflation (right axis)

1999

40

Nigeria

26

80

Morocco

REER

1997

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

REER

100

Mali

Inflation (right axis)

REER

18 16 14 12 10 8 6 4 2 0

120

0

Madagascar REER

Inflation (right axis)

2005

4

REER 140

2003

6

1995

2005

2003

2001

1999

1997

1995

76 74 72 70

8

1997

84 82 80 78

10

114 112 110 108 106 104 102 100 98 96 94

1999

16 14 12 10 8 6 4 2 0

86

Egypt Inflation (right axis)

2001

REER

1997

Inflation (right axis)

1999

Benin REER

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OECD Development Centre Working Paper No. 270

DEV/DOC(2008)6

Latin America Chile

Brazil REER

Inflation (right axis)

120

30

120

70

120

100

25

100

60

100

0

2005

1995

Panama REER

1.6

120

16

110

1.4 1.2

100

14

105

15

100

10

95

1 0.8 0.6

90

Peru 14

120

12

100

60

8 6

40

2005

2003

12 10

20

4 2

0

0

85

2005

2003

2001

80

60 40

2

20

0

0

2005

4

2003

6

2001

90

80

1999

8

1997

10

95

Inflation (right axis) 45 40 35 30 25 20 15 10 5 0

1995

100

1999

80

Uruguay REER

Inflation (right axis)

105

1997

2001

0

1999

80

1995

2005

2003

2001

1999

1997

1995

0

85

0.4 0.2

1997

5

Inflation (right axis)

115

2005

20

REER

1997

25

Paraguay

Inflation (right axis)

1995

106 104 102 100 98 96 94 92 90 88 86 84

1995

1995

0

2003

20

0

2001

10

-5

1999

0

Inflation (right axis)

REER

40

20

Costa Rica REER

60

2005

20

2003

30

40

2005

2003

2001

1999

1997

0

1995

20

5

80

2003

10

40

40

60

1997

60

50

80

2001

15

9 8 7 6 5 4 3 2 1 0

1999

20

80

Inflation (right axis)

2001

REER

1997

Inflation (right axis)

1999

Argentina REER

Source: Authors, 2008; based on Economist Intelligence Unit and IMF Statistical Yearbook, 2007. Data on inflation for Africa from World Economic Outlook and Penn World Tables, 2008.

In none of the sample countries has inflation risen during the AD-induced boom period. These findings suggest some degree of sterilised foreign-exchange intervention and the absence of hard nominal exchange-rate pegs, which would have had to accommodate commodityinduced appreciation pressures through a rise in inflation. In Zambia, inflation did exceed 20 per cent until 2004, whence some exchange-rate based stabilisation brought it down. A priori, one can expect the Asian Drivers’ export share to lower inflation through nominal appreciation. This expected response will depend very much on the degree to which the authorities allow nominal currency appreciation to operate. The following equation estimates the impact of the Asian Drivers on inflation:

dev _ inf latit   0   1 * exp ort _ ADit   2 * gov _ exp_ growth   it

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The Macro Management of Commodity Booms: Africa and Latin America’s Response to Asian Demand

DEV/DOC(2008)6 where the inflation deviation is defined as the difference between the average CPIinflation during the period 1987-1999 and the CPI-inflation in year t, and export_AD represents the export share of country i to the Asian Drivers. Data on inflation comes from the Economist Intelligence Unit (based on the IFS Database in Datastream). The World Integrated Trade Statistics (WITS) Database provides the information on export shares. The equation is estimated for 20002005, using a Hausman-tested fixed-effect estimator for both samples. Tables 6a-6c present the results. Table 6a. Inflation Deviation and Exports to Asian Drivers: All countries

export_ad gov_exp_growth Observations Number of id_gen R-squared

2000-2005 Latin America Africa -4.91E+01 -3.19E+00 [0.55] [0.23] 0.21 0.06** [0.81] [2.19] 9.10E+01 1.23E+02 16 23 0.01 0.05

Notes: Absolute value of t statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

Table 6b. Inflation Deviation and Exports to Asian Drivers: Selection Group

export_ad gov_exp_growth Observations Number of id_gen R-squared

2000-2005 Latin America Africa -2.90E+01 -2.96E+00 [0.67] [0.29] 0.2 0.05** [1.07] [2.40] 4.60E+01 6.40E+01 8 12 0.04 0.1

Notes: Absolute value of t statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

Table 6c. Inflation Deviation and Exports to Asian Drivers: Control Group

export_ad gov_exp_growth Observations Number of id_gen R-squared

2000-2005 Latin America Africa -4.98E+02 2.05E+01 [0.85] [0.21] 0.12 0.31* [0.25] [1.94] 4.50E+01 5.90E+01 8 11 0.03 0.08

Notes: Absolute value of t statistics in brackets * significant at 10%; ** significant at 5%; *** significant at 1%

For the all-country sample, a negative relationship appears between inflation deviation and export shares to the Asian drivers, but it is not statistically significant. It does suggest, however, that increased AD exports could have had the expected impact on the gap between observed inflation and average inflation before the Asian boom. The second explanatory 28

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DEV/DOC(2008)6 variable, the growth of government expenditure, seems positively correlated with this deviation, and it is significant (at five per cent) for Africa. This suggests that Africa would have experienced higher inflation in the absence of its general anti-cyclical fiscal stance. Results for the selection group are quite similar. Both coefficients for the export share remain negative, but statistically non-significant. The government-expenditure growth coefficient for Africa remains positive and significant, reinforcing the suggestion of an important role for fiscal policy in explaining inflation deviations. For the control group, the export-shares coefficient for Africa turns positive (although not significant). The coefficient on government spending stays both positive and significant for Africa.

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DEV/DOC(2008)6

V. CONCLUDING REMARKS: AN OPPORTUNITY FOR BETTER MANAGEMENT

This paper’s conclusions present cause for optimism about macroeconomic policy responses to the impact of AD-induced commodity booms in Africa and Latin America. Commodity-exporting countries have realised clear benefits from the current boom. It has raised net export receipts and broadened exporters’ client bases, enabling them to retire costly debt, improve their credit profiles, increase foreign exchange reserves to reduce vulnerability to future speculative attacks, finance infrastructure for future growth and build nest eggs abroad and at home for leaner times. Meanwhile, the negative Dutch disease effects, Leamer corner solutions and lower non-resource exports that might have resulted from the commodity boom have been mild. The prospective sources of commodity demand from the Asian Drivers could well migrate from depletable minerals to replenishable agricultural commodities, which arguably exert more positive long-run benefits for development (Collier and Goderis, 2007). Policy performance deserves credit for many of the beneficial effects observed so far. Monetary policy choices have targeted both inflation and real effective exchange rates with some success (with exceptions such as Zambia). These findings unexpectedly suggest that as the ADdriven commodity boom gained full momentum, macroeconomic policy challenges and monetary policy have been better managed in Africa than, on average, in Latin America. The rapid growth of Asian emerging economies has raised demand for Africa and Latin America’s commodities (oil, metals and precious stones) and has resulted in improved terms of trade as well as rapid growth in primary commodity exports. Yet deficient infrastructure, insufficient investment in human capital and inadequate policies limit the ability of these exporting economies to seize fully the opportunities opened up by global markets. The increased global demand for agricultural and food products opens potentially encouraging new avenues for a more balanced development pattern than that possible under a solely extractive model. Realising that potential requires commitment of resources and productivity enhancement in these sectors. For exporters of natural resources, the challenge is to capitalise on mineral windfalls to invest a large proportion of the proceeds from the minerals sector in infrastructure and human-capital development. Diversification remains imperative. A medium-term objective, it will depend on, among other things, the capacity to promote private-sector development, particularly in Africa.

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OTHER TITLES IN THE SERIES/ AUTRES TITRES DANS LA SÉRIE

The former series known as “Technical Papers” and “Webdocs” merged in November 2003 into “Development Centre Working Papers”. In the new series, former Webdocs 1-17 follow former Technical Papers 1-212 as Working Papers 213-229. All these documents may be downloaded from: http://www.oecd.org/dev/wp or obtained via e-mail (dev.contact@oecd.org). Working Paper No.1, Macroeconomic Adjustment and Income Distribution: A Macro-Micro Simulation Model, by François Bourguignon, William H. Branson and Jaime de Melo, March 1989. Working Paper No. 2, International Interactions in Food and Agricultural Policies: The Effect of Alternative Policies, by Joachim Zietz and Alberto Valdés, April, 1989. Working Paper No. 3, The Impact of Budget Retrenchment on Income Distribution in Indonesia: A Social Accounting Matrix Application, by Steven Keuning and Erik Thorbecke, June 1989. Working Paper No. 3a, Statistical Annex: The Impact of Budget Retrenchment, June 1989. Document de travail No. 4, Le Rééquilibrage entre le secteur public et le secteur privé : le cas du Mexique, par C.-A. Michalet, juin 1989. Working Paper No. 5, Rebalancing the Public and Private Sectors: The Case of Malaysia, by R. Leeds, July 1989. Working Paper No. 6, Efficiency, Welfare Effects, and Political Feasibility of Alternative Antipoverty and Adjustment Programs, by Alain de Janvry and Elisabeth Sadoulet, December 1989. Document de travail No. 7, Ajustement et distribution des revenus : application d’un modèle macro-micro au Maroc, par Christian Morrisson, avec la collaboration de Sylvie Lambert et Akiko Suwa, décembre 1989. Working Paper No. 8, Emerging Maize Biotechnologies and their Potential Impact, by W. Burt Sundquist, December 1989. Document de travail No. 9, Analyse des variables socio-culturelles et de l’ajustement en Côte d’Ivoire, par W. Weekes-Vagliani, janvier 1990. Working Paper No. 10, A Financial Computable General Equilibrium Model for the Analysis of Ecuador’s Stabilization Programs, by André Fargeix and Elisabeth Sadoulet, February 1990. Working Paper No. 11, Macroeconomic Aspects, Foreign Flows and Domestic Savings Performance in Developing Countries: A ”State of The Art” Report, by Anand Chandavarkar, February 1990. Working Paper No. 12, Tax Revenue Implications of the Real Exchange Rate: Econometric Evidence from Korea and Mexico, by Viriginia Fierro and Helmut Reisen, February 1990. Working Paper No. 13, Agricultural Growth and Economic Development: The Case of Pakistan, by Naved Hamid and Wouter Tims, April 1990. Working Paper No. 14, Rebalancing the Public and Private Sectors in Developing Countries: The Case of Ghana, by H. Akuoko-Frimpong, June 1990. Working Paper No. 15, Agriculture and the Economic Cycle: An Economic and Econometric Analysis with Special Reference to Brazil, by Florence Contré and Ian Goldin, June 1990. Working Paper No. 16, Comparative Advantage: Theory and Application to Developing Country Agriculture, by Ian Goldin, June 1990. Working Paper No. 17, Biotechnology and Developing Country Agriculture: Maize in Brazil, by Bernardo Sorj and John Wilkinson, June 1990. Working Paper No. 18, Economic Policies and Sectoral Growth: Argentina 1913-1984, by Yair Mundlak, Domingo Cavallo, Roberto Domenech, June 1990. Working Paper No. 19, Biotechnology and Developing Country Agriculture: Maize In Mexico, by Jaime A. Matus Gardea, Arturo Puente Gonzalez and Cristina Lopez Peralta, June 1990.

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DEV/DOC(2008)6 Working Paper No. 20, Biotechnology and Developing Country Agriculture: Maize in Thailand, by Suthad Setboonsarng, July 1990. Working Paper No. 21, International Comparisons of Efficiency in Agricultural Production, by Guillermo Flichmann, July 1990. Working Paper No. 22, Unemployment in Developing Countries: New Light on an Old Problem, by David Turnham and Denizhan Eröcal, July 1990. Working Paper No. 23, Optimal Currency Composition of Foreign Debt: the Case of Five Developing Countries, by Pier Giorgio Gawronski, August 1990. Working Paper No. 24, From Globalization to Regionalization: the Mexican Case, by Wilson Peres Núñez, August 1990. Working Paper No. 25, Electronics and Development in Venezuela: A User-Oriented Strategy and its Policy Implications, by Carlota Perez, October 1990. Working Paper No. 26, The Legal Protection of Software: Implications for Latecomer Strategies in Newly Industrialising Economies (NIEs) and Middle-Income Economies (MIEs), by Carlos Maria Correa, October 1990. Working Paper No. 27, Specialization, Technical Change and Competitiveness in the Brazilian Electronics Industry, by Claudio R. Frischtak, October 1990. Working Paper No. 28, Internationalization Strategies of Japanese Electronics Companies: Implications for Asian Newly Industrializing Economies (NIEs), by Bundo Yamada, October 1990. Working Paper No. 29, The Status and an Evaluation of the Electronics Industry in Taiwan, by Gee San, October 1990. Working Paper No. 30, The Indian Electronics Industry: Current Status, Perspectives and Policy Options, by Ghayur Alam, October 1990. Working Paper No. 31, Comparative Advantage in Agriculture in Ghana, by James Pickett and E. Shaeeldin, October 1990. Working Paper No. 32, Debt Overhang, Liquidity Constraints and Adjustment Incentives, by Bert Hofman and Helmut Reisen, October 1990. Working Paper No. 34, Biotechnology and Developing Country Agriculture: Maize in Indonesia, by Hidjat Nataatmadja et al., January 1991. Working Paper No. 35, Changing Comparative Advantage in Thai Agriculture, by Ammar Siamwalla, Suthad Setboonsarng and Prasong Werakarnjanapongs, March 1991. Working Paper No. 36, Capital Flows and the External Financing of Turkey’s Imports, by Ziya Önis and Süleyman Özmucur, July 1991. Working Paper No. 37, The External Financing of Indonesia’s Imports, by Glenn P. Jenkins and Henry B.F. Lim, July 1991. Working Paper No. 38, Long-term Capital Reflow under Macroeconomic Stabilization in Latin America, by Beatriz Armendariz de Aghion, July 1991. Working Paper No. 39, Buybacks of LDC Debt and the Scope for Forgiveness, by Beatriz Armendariz de Aghion, July 1991. Working Paper No. 40, Measuring and Modelling Non-Tariff Distortions with Special Reference to Trade in Agricultural Commodities, by Peter J. Lloyd, July 1991. Working Paper No. 41, The Changing Nature of IMF Conditionality, by Jacques J. Polak, August 1991. Working Paper No. 42, Time-Varying Estimates on the Openness of the Capital Account in Korea and Taiwan, by Helmut Reisen and Hélène Yèches, August 1991. Working Paper No. 43, Toward a Concept of Development Agreements, by F. Gerard Adams, August 1991. Document de travail No. 44, Le Partage du fardeau entre les créanciers de pays débiteurs défaillants, par Jean-Claude Berthélemy et Ann Vourc’h, septembre 1991. Working Paper No. 45, The External Financing of Thailand’s Imports, by Supote Chunanunthathum, October 1991. Working Paper No. 46, The External Financing of Brazilian Imports, by Enrico Colombatto, with Elisa Luciano, Luca Gargiulo, Pietro Garibaldi and Giuseppe Russo, October 1991. Working Paper No. 47, Scenarios for the World Trading System and their Implications for Developing Countries, by Robert Z. Lawrence, November 1991. Working Paper No. 48, Trade Policies in a Global Context: Technical Specifications of the Rural/Urban-North/South (RUNS) Applied General Equilibrium Model, by Jean-Marc Burniaux and Dominique van der Mensbrugghe, November 1991. Working Paper No. 49, Macro-Micro Linkages: Structural Adjustment and Fertilizer Policy in Sub-Saharan Africa, by Jean-Marc Fontaine with the collaboration of Alice Sindzingre, December 1991. Working Paper No. 50, Aggregation by Industry in General Equilibrium Models with International Trade, by Peter J. Lloyd, December 1991. Working Paper No. 51, Policy and Entrepreneurial Responses to the Montreal Protocol: Some Evidence from the Dynamic Asian Economies, by David C. O’Connor, December 1991. Working Paper No. 52, On the Pricing of LDC Debt: an Analysis Based on Historical Evidence from Latin America, by Beatriz Armendariz de Aghion, February 1992. Working Paper No. 53, Economic Regionalisation and Intra-Industry Trade: Pacific-Asian Perspectives, by Kiichiro Fukasaku, February 1992. Working Paper No. 54, Debt Conversions in Yugoslavia, by Mojmir Mrak, February 1992. Working Paper No. 55, Evaluation of Nigeria’s Debt-Relief Experience (1985-1990), by N.E. Ogbe, March 1992. Document de travail No. 56, L’Expérience de l’allégement de la dette du Mali, par Jean-Claude Berthélemy, février 1992. Working Paper No. 57, Conflict or Indifference: US Multinationals in a World of Regional Trading Blocs, by Louis T. Wells, Jr., March 1992. Working Paper No. 58, Japan’s Rapidly Emerging Strategy Toward Asia, by Edward J. Lincoln, April 1992.

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DEV/DOC(2008)6 Working Paper No. 59, The Political Economy of Stabilization Programmes in Developing Countries, by Bruno S. Frey and Reiner Eichenberger, April 1992. Working Paper No. 60, Some Implications of Europe 1992 for Developing Countries, by Sheila Page, April 1992. Working Paper No. 61, Taiwanese Corporations in Globalisation and Regionalisation, by Gee San, April 1992. Working Paper No. 62, Lessons from the Family Planning Experience for Community-Based Environmental Education, by Winifred Weekes-Vagliani, April 1992. Working Paper No. 63, Mexican Agriculture in the Free Trade Agreement: Transition Problems in Economic Reform, by Santiago Levy and Sweder van Wijnbergen, May 1992. Working Paper No. 64, Offensive and Defensive Responses by European Multinationals to a World of Trade Blocs, by John M. Stopford, May 1992. Working Paper No. 65, Economic Integration in the Pacific Region, by Richard Drobnick, May 1992. Working Paper No. 66, Latin America in a Changing Global Environment, by Winston Fritsch, May 1992. Working Paper No. 67, An Assessment of the Brady Plan Agreements, by Jean-Claude Berthélemy and Robert Lensink, May 1992. Working Paper No. 68, The Impact of Economic Reform on the Performance of the Seed Sector in Eastern and Southern Africa, by Elizabeth Cromwell, June 1992. Working Paper No. 69, Impact of Structural Adjustment and Adoption of Technology on Competitiveness of Major Cocoa Producing Countries, by Emily M. Bloomfield and R. Antony Lass, June 1992. Working Paper No. 70, Structural Adjustment and Moroccan Agriculture: an Assessment of the Reforms in the Sugar and Cereal Sectors, by Jonathan Kydd and Sophie Thoyer, June 1992. Document de travail No. 71, L’Allégement de la dette au Club de Paris : les évolutions récentes en perspective, par Ann Vourc’h, juin 1992. Working Paper No. 72, Biotechnology and the Changing Public/Private Sector Balance: Developments in Rice and Cocoa, by Carliene Brenner, July 1992. Working Paper No. 73, Namibian Agriculture: Policies and Prospects, by Walter Elkan, Peter Amutenya, Jochbeth Andima, Robin Sherbourne and Eline van der Linden, July 1992. Working Paper No. 74, Agriculture and the Policy Environment: Zambia and Zimbabwe, by Doris J. Jansen and Andrew Rukovo, July 1992. Working Paper No. 75, Agricultural Productivity and Economic Policies: Concepts and Measurements, by Yair Mundlak, August 1992. Working Paper No. 76, Structural Adjustment and the Institutional Dimensions of Agricultural Research and Development in Brazil: Soybeans, Wheat and Sugar Cane, by John Wilkinson and Bernardo Sorj, August 1992. Working Paper No. 77, The Impact of Laws and Regulations on Micro and Small Enterprises in Niger and Swaziland, by Isabelle Joumard, Carl Liedholm and Donald Mead, September 1992. Working Paper No. 78, Co-Financing Transactions between Multilateral Institutions and International Banks, by Michel Bouchet and Amit Ghose, October 1992. Document de travail No. 79, Allégement de la dette et croissance : le cas mexicain, par Jean-Claude Berthélemy et Ann Vourc’h, octobre 1992. Document de travail No. 80, Le Secteur informel en Tunisie : cadre réglementaire et pratique courante, par Abderrahman Ben Zakour et Farouk Kria, novembre 1992. Working Paper No. 81, Small-Scale Industries and Institutional Framework in Thailand, by Naruemol Bunjongjit and Xavier Oudin, November 1992. Working Paper No. 81a, Statistical Annex: Small-Scale Industries and Institutional Framework in Thailand, by Naruemol Bunjongjit and Xavier Oudin, November 1992. Document de travail No. 82, L’Expérience de l’allégement de la dette du Niger, par Ann Vourc’h et Maina Boukar Moussa, novembre 1992. Working Paper No. 83, Stabilization and Structural Adjustment in Indonesia: an Intertemporal General Equilibrium Analysis, by David Roland-Holst, November 1992. Working Paper No. 84, Striving for International Competitiveness: Lessons from Electronics for Developing Countries, by Jan Maarten de Vet, March 1993. Document de travail No. 85, Micro-entreprises et cadre institutionnel en Algérie, par Hocine Benissad, mars 1993. Working Paper No. 86, Informal Sector and Regulations in Ecuador and Jamaica, by Emilio Klein and Victor E. Tokman, August 1993. Working Paper No. 87, Alternative Explanations of the Trade-Output Correlation in the East Asian Economies, by Colin I. Bradford Jr. and Naomi Chakwin, August 1993. Document de travail No. 88, La Faisabilité politique de l’ajustement dans les pays africains, par Christian Morrisson, Jean-Dominique Lafay et Sébastien Dessus, novembre 1993. Working Paper No. 89, China as a Leading Pacific Economy, by Kiichiro Fukasaku and Mingyuan Wu, November 1993. Working Paper No. 90, A Detailed Input-Output Table for Morocco, 1990, by Maurizio Bussolo and David Roland-Holst November 1993. Working Paper No. 91, International Trade and the Transfer of Environmental Costs and Benefits, by Hiro Lee and David Roland-Holst, December 1993. Working Paper No. 92, Economic Instruments in Environmental Policy: Lessons from the OECD Experience and their Relevance to Developing Economies, by Jean-Philippe Barde, January 1994.

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DEV/DOC(2008)6 Working Paper No. 93, What Can Developing Countries Learn from OECD Labour Market Programmes and Policies?, by Åsa Sohlman with David Turnham, January 1994. Working Paper No. 94, Trade Liberalization and Employment Linkages in the Pacific Basin, by Hiro Lee and David Roland-Holst, February 1994. Working Paper No. 95, Participatory Development and Gender: Articulating Concepts and Cases, by Winifred Weekes-Vagliani, February 1994. Document de travail No. 96, Promouvoir la maîtrise locale et régionale du développement : une démarche participative à Madagascar, par Philippe de Rham et Bernard Lecomte, juin 1994. Working Paper No. 97, The OECD Green Model: an Updated Overview, by Hiro Lee, Joaquim Oliveira-Martins and Dominique van der Mensbrugghe, August 1994. Working Paper No. 98, Pension Funds, Capital Controls and Macroeconomic Stability, by Helmut Reisen and John Williamson, August 1994. Working Paper No. 99, Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention, by John Beghin, David Roland-Holst and Dominique van der Mensbrugghe, October 1994. Working Paper No. 100, International Initiatives in Biotechnology for Developing Country Agriculture: Promises and Problems, by Carliene Brenner and John Komen, October 1994. Working Paper No. 101, Input-based Pollution Estimates for Environmental Assessment in Developing Countries, by Sébastien Dessus, David Roland-Holst and Dominique van der Mensbrugghe, October 1994. Working Paper No. 102, Transitional Problems from Reform to Growth: Safety Nets and Financial Efficiency in the Adjusting Egyptian Economy, by Mahmoud Abdel-Fadil, December 1994. Working Paper No. 103, Biotechnology and Sustainable Agriculture: Lessons from India, by Ghayur Alam, December 1994. Working Paper No. 104, Crop Biotechnology and Sustainability: a Case Study of Colombia, by Luis R. Sanint, January 1995. Working Paper No. 105, Biotechnology and Sustainable Agriculture: the Case of Mexico, by José Luis Solleiro Rebolledo, January 1995. Working Paper No. 106, Empirical Specifications for a General Equilibrium Analysis of Labor Market Policies and Adjustments, by Andréa Maechler and David Roland-Holst, May 1995. Document de travail No. 107, Les Migrants, partenaires de la coopération internationale : le cas des Maliens de France, par Christophe Daum, juillet 1995. Document de travail No. 108, Ouverture et croissance industrielle en Chine : étude empirique sur un échantillon de villes, par Sylvie Démurger, septembre 1995. Working Paper No. 109, Biotechnology and Sustainable Crop Production in Zimbabwe, by John J. Woodend, December 1995. Document de travail No. 110, Politiques de l’environnement et libéralisation des échanges au Costa Rica : une vue d’ensemble, par Sébastien Dessus et Maurizio Bussolo, février 1996. Working Paper No. 111, Grow Now/Clean Later, or the Pursuit of Sustainable Development?, by David O’Connor, March 1996. Working Paper No. 112, Economic Transition and Trade-Policy Reform: Lessons from China, by Kiichiro Fukasaku and Henri-Bernard Solignac Lecomte, July 1996. Working Paper No. 113, Chinese Outward Investment in Hong Kong: Trends, Prospects and Policy Implications, by Yun-Wing Sung, July 1996. Working Paper No. 114, Vertical Intra-industry Trade between China and OECD Countries, by Lisbeth Hellvin, July 1996. Document de travail No. 115, Le Rôle du capital public dans la croissance des pays en développement au cours des années 80, par Sébastien Dessus et Rémy Herrera, juillet 1996. Working Paper No. 116, General Equilibrium Modelling of Trade and the Environment, by John Beghin, Sébastien Dessus, David RolandHolst and Dominique van der Mensbrugghe, September 1996. Working Paper No. 117, Labour Market Aspects of State Enterprise Reform in Viet Nam, by David O’Connor, September 1996. Document de travail No. 118, Croissance et compétitivité de l’industrie manufacturière au Sénégal, par Thierry Latreille et Aristomène Varoudakis, octobre 1996. Working Paper No. 119, Evidence on Trade and Wages in the Developing World, by Donald J. Robbins, December 1996. Working Paper No. 120, Liberalising Foreign Investments by Pension Funds: Positive and Normative Aspects, by Helmut Reisen, January 1997. Document de travail No. 121, Capital Humain, ouverture extérieure et croissance : estimation sur données de panel d’un modèle à coefficients variables, par Jean-Claude Berthélemy, Sébastien Dessus et Aristomène Varoudakis, janvier 1997. Working Paper No. 122, Corruption: The Issues, by Andrew W. Goudie and David Stasavage, January 1997. Working Paper No. 123, Outflows of Capital from China, by David Wall, March 1997. Working Paper No. 124, Emerging Market Risk and Sovereign Credit Ratings, by Guillermo Larraín, Helmut Reisen and Julia von Maltzan, April 1997. Working Paper No. 125, Urban Credit Co-operatives in China, by Eric Girardin and Xie Ping, August 1997. Working Paper No. 126, Fiscal Alternatives of Moving from Unfunded to Funded Pensions, by Robert Holzmann, August 1997. Working Paper No. 127, Trade Strategies for the Southern Mediterranean, by Peter A. Petri, December 1997. Working Paper No. 128, The Case of Missing Foreign Investment in the Southern Mediterranean, by Peter A. Petri, December 1997.

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DEV/DOC(2008)6 Working Paper No. 129, Economic Reform in Egypt in a Changing Global Economy, by Joseph Licari, December 1997. Working Paper No. 130, Do Funded Pensions Contribute to Higher Aggregate Savings? A Cross-Country Analysis, by Jeanine Bailliu and Helmut Reisen, December 1997. Working Paper No. 131, Long-run Growth Trends and Convergence Across Indian States, by Rayaprolu Nagaraj, Aristomène Varoudakis and Marie-Ange Véganzonès, January 1998. Working Paper No. 132, Sustainable and Excessive Current Account Deficits, by Helmut Reisen, February 1998. Working Paper No. 133, Intellectual Property Rights and Technology Transfer in Developing Country Agriculture: Rhetoric and Reality, by Carliene Brenner, March 1998. Working Paper No. 134, Exchange-rate Management and Manufactured Exports in Sub-Saharan Africa, by Khalid Sekkat and Aristomène Varoudakis, March 1998. Working Paper No. 135, Trade Integration with Europe, Export Diversification and Economic Growth in Egypt, by Sébastien Dessus and Akiko Suwa-Eisenmann, June 1998. Working Paper No. 136, Domestic Causes of Currency Crises: Policy Lessons for Crisis Avoidance, by Helmut Reisen, June 1998. Working Paper No. 137, A Simulation Model of Global Pension Investment, by Landis MacKellar and Helmut Reisen, August 1998. Working Paper No. 138, Determinants of Customs Fraud and Corruption: Evidence from Two African Countries, by David Stasavage and Cécile Daubrée, August 1998. Working Paper No. 139, State Infrastructure and Productive Performance in Indian Manufacturing, by Arup Mitra, Aristomène Varoudakis and Marie-Ange Véganzonès, August 1998. Working Paper No. 140, Rural Industrial Development in Viet Nam and China: A Study in Contrasts, by David O’Connor, September 1998. Working Paper No. 141,Labour Market Aspects of State Enterprise Reform in China, by Fan Gang,Maria Rosa Lunati and David O’Connor, October 1998. Working Paper No. 142, Fighting Extreme Poverty in Brazil: The Influence of Citizens’ Action on Government Policies, by Fernanda Lopes de Carvalho, November 1998. Working Paper No. 143, How Bad Governance Impedes Poverty Alleviation in Bangladesh, by Rehman Sobhan, November 1998. Document de travail No. 144, La libéralisation de l’agriculture tunisienne et l’Union européenne: une vue prospective, par Mohamed Abdelbasset Chemingui et Sébastien Dessus, février 1999. Working Paper No. 145, Economic Policy Reform and Growth Prospects in Emerging African Economies, by Patrick Guillaumont, Sylviane Guillaumont Jeanneney and Aristomène Varoudakis, March 1999. Working Paper No. 146, Structural Policies for International Competitiveness in Manufacturing: The Case of Cameroon, by Ludvig Söderling, March 1999. Working Paper No. 147, China’s Unfinished Open-Economy Reforms: Liberalisation of Services, by Kiichiro Fukasaku, Yu Ma and Qiumei Yang, April 1999. Working Paper No. 148, Boom and Bust and Sovereign Ratings, by Helmut Reisen and Julia von Maltzan, June 1999. Working Paper No. 149, Economic Opening and the Demand for Skills in Developing Countries: A Review of Theory and Evidence, by David O’Connor and Maria Rosa Lunati, June 1999. Working Paper No. 150, The Role of Capital Accumulation, Adjustment and Structural Change for Economic Take-off: Empirical Evidence from African Growth Episodes, by Jean-Claude Berthélemy and Ludvig Söderling, July 1999. Working Paper No. 151, Gender, Human Capital and Growth: Evidence from Six Latin American Countries, by Donald J. Robbins, September 1999. Working Paper No. 152, The Politics and Economics of Transition to an Open Market Economy in Viet Nam, by James Riedel and William S. Turley, September 1999. Working Paper No. 153, The Economics and Politics of Transition to an Open Market Economy: China, by Wing Thye Woo, October 1999. Working Paper No. 154, Infrastructure Development and Regulatory Reform in Sub-Saharan Africa: The Case of Air Transport, by Andrea E. Goldstein, October 1999. Working Paper No. 155, The Economics and Politics of Transition to an Open Market Economy: India, by Ashok V. Desai, October 1999. Working Paper No. 156, Climate Policy Without Tears: CGE-Based Ancillary Benefits Estimates for Chile, by Sébastien Dessus and David O’Connor, November 1999. Document de travail No. 157, Dépenses d’éducation, qualité de l’éducation et pauvreté : l’exemple de cinq pays d’Afrique francophone, par Katharina Michaelowa, avril 2000. Document de travail No. 158, Une estimation de la pauvreté en Afrique subsaharienne d’après les données anthropométriques, par Christian Morrisson, Hélène Guilmeau et Charles Linskens, mai 2000. Working Paper No. 159, Converging European Transitions, by Jorge Braga de Macedo, July 2000. Working Paper No. 160, Capital Flows and Growth in Developing Countries: Recent Empirical Evidence, by Marcelo Soto, July 2000. Working Paper No. 161, Global Capital Flows and the Environment in the 21st Century, by David O’Connor, July 2000. Working Paper No. 162, Financial Crises and International Architecture: A “Eurocentric” Perspective, by Jorge Braga de Macedo, August 2000. Document de travail No. 163, Résoudre le problème de la dette : de l’initiative PPTE à Cologne, par Anne Joseph, août 2000.Working Paper No. 164, E-Commerce for Development: Prospects and Policy Issues, by Andrea Goldstein and David O’Connor, September 2000.

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DEV/DOC(2008)6 Working Paper No. 165, Negative Alchemy? Corruption and Composition of Capital Flows, by Shang-Jin Wei, October 2000. Working Paper No. 166, The HIPC Initiative: True and False Promises, by Daniel Cohen, October 2000. Document de travail No. 167, Les facteurs explicatifs de la malnutrition en Afrique subsaharienne, par Christian Morrisson et Charles Linskens, octobre 2000. Working Paper No. 168, Human Capital and Growth: A Synthesis Report, by Christopher A. Pissarides, November 2000. Working Paper No. 169, Obstacles to Expanding Intra-African Trade, by Roberto Longo and Khalid Sekkat, March 2001. Working Paper No. 170, Regional Integration In West Africa, by Ernest Aryeetey, March 2001. Working Paper No. 171, Regional Integration Experience in the Eastern African Region, by Andrea Goldstein and Njuguna S. Ndung’u, March 2001. Working Paper No. 172, Integration and Co-operation in Southern Africa, by Carolyn Jenkins, March 2001. Working Paper No. 173, FDI in Sub-Saharan Africa, by Ludger Odenthal, March 2001 Document de travail No. 174, La réforme des télécommunications en Afrique subsaharienne, par Patrick Plane, mars 2001. Working Paper No. 175, Fighting Corruption in Customs Administration: What Can We Learn from Recent Experiences?, by Irène Hors; April 2001. Working Paper No. 176, Globalisation and Transformation: Illusions and Reality, by Grzegorz W. Kolodko, May 2001. Working Paper No. 177, External Solvency, Dollarisation and Investment Grade: Towards a Virtuous Circle?, by Martin Grandes, June 2001. Document de travail No. 178, Congo 1965-1999: Les espoirs déçus du « Brésil africain », par Joseph Maton avec Henri-Bernard Solignac Lecomte, septembre 2001. Working Paper No. 179, Growth and Human Capital: Good Data, Good Results, by Daniel Cohen and Marcelo Soto, September 2001. Working Paper No. 180, Corporate Governance and National Development, by Charles P. Oman, October 2001. Working Paper No. 181, How Globalisation Improves Governance, by Federico Bonaglia, Jorge Braga de Macedo and Maurizio Bussolo, November 2001. Working Paper No. 182, Clearing the Air in India: The Economics of Climate Policy with Ancillary Benefits, by Maurizio Bussolo and David O’Connor, November 2001. Working Paper No. 183, Globalisation, Poverty and Inequality in sub-Saharan Africa: A Political Economy Appraisal, by Yvonne M. Tsikata, December 2001. Working Paper No. 184, Distribution and Growth in Latin America in an Era of Structural Reform: The Impact of Globalisation, by Samuel A. Morley, December 2001. Working Paper No. 185, Globalisation, Liberalisation, Poverty and Income Inequality in Southeast Asia, by K.S. Jomo, December 2001. Working Paper No. 186, Globalisation, Growth and Income Inequality: The African Experience, by Steve Kayizzi-Mugerwa, December 2001. Working Paper No. 187, The Social Impact of Globalisation in Southeast Asia, by Mari Pangestu, December 2001. Working Paper No. 188, Where Does Inequality Come From? Ideas and Implications for Latin America, by James A. Robinson, December 2001. Working Paper No. 189, Policies and Institutions for E-Commerce Readiness: What Can Developing Countries Learn from OECD Experience?, by Paulo Bastos Tigre and David O’Connor, April 2002. Document de travail No. 190, La réforme du secteur financier en Afrique, par Anne Joseph, juillet 2002. Working Paper No. 191, Virtuous Circles? Human Capital Formation, Economic Development and the Multinational Enterprise, by Ethan B. Kapstein, August 2002. Working Paper No. 192, Skill Upgrading in Developing Countries: Has Inward Foreign Direct Investment Played a Role?, by Matthew J. Slaughter, August 2002. Working Paper No. 193, Government Policies for Inward Foreign Direct Investment in Developing Countries: Implications for Human Capital Formation and Income Inequality, by Dirk Willem te Velde, August 2002. Working Paper No. 194, Foreign Direct Investment and Intellectual Capital Formation in Southeast Asia, by Bryan K. Ritchie, August 2002. Working Paper No. 195, FDI and Human Capital: A Research Agenda, by Magnus Blomström and Ari Kokko, August 2002. Working Paper No. 196, Knowledge Diffusion from Multinational Enterprises: The Role of Domestic and Foreign Knowledge-Enhancing Activities, by Yasuyuki Todo and Koji Miyamoto, August 2002. Working Paper No. 197, Why Are Some Countries So Poor? Another Look at the Evidence and a Message of Hope, by Daniel Cohen and Marcelo Soto, October 2002. Working Paper No. 198, Choice of an Exchange-Rate Arrangement, Institutional Setting and Inflation: Empirical Evidence from Latin America, by Andreas Freytag, October 2002. Working Paper No. 199, Will Basel II Affect International Capital Flows to Emerging Markets?, by Beatrice Weder and Michael Wedow, October 2002. Working Paper No. 200, Convergence and Divergence of Sovereign Bond Spreads: Lessons from Latin America, by Martin Grandes, October 2002. Working Paper No. 201, Prospects for Emerging-Market Flows amid Investor Concerns about Corporate Governance, by Helmut Reisen, November 2002. Working Paper No. 202, Rediscovering Education in Growth Regressions, by Marcelo Soto, November 2002.

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DEV/DOC(2008)6 Working Paper No. 203, Incentive Bidding for Mobile Investment: Economic Consequences and Potential Responses, by Andrew Charlton, January 2003. Working Paper No. 204, Health Insurance for the Poor? Determinants of participation Community-Based Health Insurance Schemes in Rural Senegal, by Johannes Jütting, January 2003. Working Paper No. 205, China’s Software Industry and its Implications for India, by Ted Tschang, February 2003. Working Paper No. 206, Agricultural and Human Health Impacts of Climate Policy in China: A General Equilibrium Analysis with Special Reference to Guangdong, by David O’Connor, Fan Zhai, Kristin Aunan, Terje Berntsen and Haakon Vennemo, March 2003. Working Paper No. 207, India’s Information Technology Sector: What Contribution to Broader Economic Development?, by Nirvikar Singh, March 2003. Working Paper No. 208, Public Procurement: Lessons from Kenya, Tanzania and Uganda, by Walter Odhiambo and Paul Kamau, March 2003. Working Paper No. 209, Export Diversification in Low-Income Countries: An International Challenge after Doha, by Federico Bonaglia and Kiichiro Fukasaku, June 2003. Working Paper No. 210, Institutions and Development: A Critical Review, by Johannes Jütting, July 2003. Working Paper No. 211, Human Capital Formation and Foreign Direct Investment in Developing Countries, by Koji Miyamoto, July 2003. Working Paper No. 212, Central Asia since 1991: The Experience of the New Independent States, by Richard Pomfret, July 2003. Working Paper No. 213, A Multi-Region Social Accounting Matrix (1995) and Regional Environmental General Equilibrium Model for India (REGEMI), by Maurizio Bussolo, Mohamed Chemingui and David O’Connor, November 2003. Working Paper No. 214, Ratings Since the Asian Crisis, by Helmut Reisen, November 2003. Working Paper No. 215, Development Redux: Reflections for a New Paradigm, by Jorge Braga de Macedo, November 2003. Working Paper No. 216, The Political Economy of Regulatory Reform: Telecoms in the Southern Mediterranean, by Andrea Goldstein, November 2003. Working Paper No. 217, The Impact of Education on Fertility and Child Mortality: Do Fathers Really Matter Less than Mothers?, by Lucia Breierova and Esther Duflo, November 2003. Working Paper No. 218, Float in Order to Fix? Lessons from Emerging Markets for EU Accession Countries, by Jorge Braga de Macedo and Helmut Reisen, November 2003. Working Paper No. 219, Globalisation in Developing Countries: The Role of Transaction Costs in Explaining Economic Performance in India, by Maurizio Bussolo and John Whalley, November 2003. Working Paper No. 220, Poverty Reduction Strategies in a Budget-Constrained Economy: The Case of Ghana, by Maurizio Bussolo and Jeffery I. Round, November 2003. Working Paper No. 221, Public-Private Partnerships in Development: Three Applications in Timor Leste, by José Braz, November 2003. Working Paper No. 222, Public Opinion Research, Global Education and Development Co-operation Reform: In Search of a Virtuous Circle, by Ida Mc Donnell, Henri-Bernard Solignac Lecomte and Liam Wegimont, November 2003. Working Paper No. 223, Building Capacity to Trade: What Are the Priorities?, by Henry-Bernard Solignac Lecomte, November 2003. Working Paper No. 224, Of Flying Geeks and O-Rings: Locating Software and IT Services in India’s Economic Development, by David O’Connor, November 2003. Document de travail No. 225, Cap Vert: Gouvernance et Développement, par Jaime Lourenço and Colm Foy, novembre 2003. Working Paper No. 226, Globalisation and Poverty Changes in Colombia, by Maurizio Bussolo and Jann Lay, November 2003. Working Paper No. 227, The Composite Indicator of Economic Activity in Mozambique (ICAE): Filling in the Knowledge Gaps to Enhance Public-Private Partnership (PPP), by Roberto J. Tibana, November 2003. Working Paper No. 228, Economic-Reconstruction in Post-Conflict Transitions: Lessons for the Democratic Republic of Congo (DRC), by Graciana del Castillo, November 2003. Working Paper No. 229, Providing Low-Cost Information Technology Access to Rural Communities In Developing Countries: What Works? What Pays? by Georg Caspary and David O’Connor, November 2003. Working Paper No. 230, The Currency Premium and Local-Currency Denominated Debt Costs in South Africa, by Martin Grandes, Marcel Peter and Nicolas Pinaud, December 2003. Working Paper No. 231, Macroeconomic Convergence in Southern Africa: The Rand Zone Experience, by Martin Grandes, December 2003. Working Paper No. 232, Financing Global and Regional Public Goods through ODA: Analysis and Evidence from the OECD Creditor Reporting System, by Helmut Reisen, Marcelo Soto and Thomas Weithöner, January 2004. Working Paper No. 233, Land, Violent Conflict and Development, by Nicolas Pons-Vignon and Henri-Bernard Solignac Lecomte, February 2004. Working Paper No. 234, The Impact of Social Institutions on the Economic Role of Women in Developing Countries, by Christian Morrisson and Johannes Jütting, May 2004. Document de travail No. 235, La condition des femmes en Inde, Kenya, Soudan et Tunisie, par Christian Morrisson, août 2004. Working Paper No. 236, Decentralisation and Poverty in Developing Countries: Exploring the Impact, by Johannes Jütting, Céline Kauffmann, Ida Mc Donnell, Holger Osterrieder, Nicolas Pinaud and Lucia Wegner, August 2004. Working Paper No. 237, Natural Disasters and Adaptive Capacity, by Jeff Dayton-Johnson, August 2004.

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DEV/DOC(2008)6 Working Paper No. 238, Public Opinion Polling and the Millennium Development Goals, by Jude Fransman, Alphonse L. MacDonnald, Ida Mc Donnell and Nicolas Pons-Vignon, October 2004. Working Paper No. 239, Overcoming Barriers to Competitiveness, by Orsetta Causa and Daniel Cohen, December 2004. Working Paper No. 240, Extending Insurance? Funeral Associations in Ethiopia and Tanzania, by Stefan Dercon, Tessa Bold, Joachim De Weerdt and Alula Pankhurst, December 2004. Working Paper No. 241, Macroeconomic Policies: New Issues of Interdependence, by Helmut Reisen, Martin Grandes and Nicolas Pinaud, January 2005. Working Paper No. 242, Institutional Change and its Impact on the Poor and Excluded: The Indian Decentralisation Experience, by D. Narayana, January 2005. Working Paper No. 243, Impact of Changes in Social Institutions on Income Inequality in China, by Hiroko Uchimura, May 2005. Working Paper No. 244, Priorities in Global Assistance for Health, AIDS and Population (HAP), by Landis MacKellar, June 2005. Working Paper No. 245, Trade and Structural Adjustment Policies in Selected Developing Countries, by Jens Andersson, Federico Bonaglia, Kiichiro Fukasaku and Caroline Lesser, July 2005. Working Paper No. 246, Economic Growth and Poverty Reduction: Measurement and Policy Issues, by Stephan Klasen, (September 2005). Working Paper No. 247, Measuring Gender (In)Equality: Introducing the Gender, Institutions and Development Data Base (GID), by Johannes P. Jütting, Christian Morrisson, Jeff Dayton-Johnson and Denis Drechsler (March 2006). Working Paper No. 248, Institutional Bottlenecks for Agricultural Development: A Stock-Taking Exercise Based on Evidence from SubSaharan Africa by Juan R. de Laiglesia, March 2006. Working Paper No. 249, Migration Policy and its Interactions with Aid, Trade and Foreign Direct Investment Policies: A Background Paper, by Theodora Xenogiani, June 2006. Working Paper No. 250, Effects of Migration on Sending Countries: What Do We Know? by Louka T. Katseli, Robert E.B. Lucas and Theodora Xenogiani, June 2006. Document de travail No. 251, L’aide au développement et les autres flux nord-sud : complémentarité ou substitution ?, par Denis Cogneau et Sylvie Lambert, juin 2006. Working Paper No. 252, Angel or Devil? China’s Trade Impact on Latin American Emerging Markets, by Jorge Blázquez-Lidoy, Javier Rodríguez and Javier Santiso, June 2006. Working Paper No. 253, Policy Coherence for Development: A Background Paper on Foreign Direct Investment, by Thierry Mayer, July 2006. Working Paper No. 254, The Coherence of Trade Flows and Trade Policies with Aid and Investment Flows, by Akiko Suwa-Eisenmann and Thierry Verdier, August 2006. Document de travail No. 255, Structures familiales, transferts et épargne : examen, par Christian Morrisson, août 2006. Working Paper No. 256, Ulysses, the Sirens and the Art of Navigation: Political and Technical Rationality in Latin America, by Javier Santiso and Laurence Whitehead, September 2006. Working Paper No. 257, Developing Country Multinationals: South-South Investment Comes of Age, by Dilek Aykut and Andrea Goldstein, November 2006. Working Paper No. 258, The Usual Suspects: A Primer on Investment Banks’ Recommendations and Emerging Markets, by Javier Santiso and Sebastián Nieto Parra, January 2007. Working Paper No. 259, Banking on Democracy: The Political Economy of International Private Bank Lending in Emerging Markets, by Javier Rodríguez and Javier Santiso, March 2007. Working Paper No. 260, New Strategies for Emerging Domestic Sovereign Bond Markets, by Hans Blommestein and Javier Santiso, April 2007. Working Paper No. 261, Privatisation in the MEDA region. Where do we stand?, by Céline Kauffmann and Lucia Wegner, July 2007. Working Paper No. 262, Strengthening Productive Capacities in Emerging Economies through Internationalisation: Evidence from the Appliance Industry, by Federico Bonaglia and Andrea Goldstein, July 2007. Working Paper No. 263, Banking on Development: Private Banks and Aid Donors in Developing Countries, by Javier Rodríguez and Javier Santiso, November 2007. Working Paper No. 264, Fiscal Decentralisation, Chinese Style: Good for Health Outcomes?, by Hiroko Uchimura and Johannes Jütting, November 2007. Working Paper No. 265, Private Sector Participation and Regulatory Reform in Water supply: the Southern Mediterranean Experience, by Edouard Pérard, January 2008. Working Paper No. 266, Informal Employment Re-loaded, by Johannes Jütting, Jante Parlevliet and Theodora Xenogiani, January 2008. Working Paper No. 267, Household Structures and Savings: Evidence from Household Surveys, by Juan R. de Laiglesia and Christian Morrisson, January 2008. Working Paper No. 268, Prudent versus Imprudent Lending to Africa: From Debt Relief to Emerging Lenders, by Helmut Reisen and Sokhna Ndoye, February 2008. Working Paper No. 269, Lending to the Poorest Countries: A New Counter-Cyclical Debt Instrument, by Daniel Cohen, Hélène DjoufelkitCottenet, Pierre Jacquet and Cécile Valadier, April 2008.

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